Judging by the conferences dedicated to maritime logistics, the ports have an amazing, innovation-rich future ahead of them.
From autonomous yard vehicles and cranes, self-optimising container stacks, to intelligent containers, ports are urged to upgrade and invest in advanced automation leveraging the Internet of Things (IoT) universe. Then there are information technologies like blockchain, and artificial intelligence to ponder as well. While automating ports makes much sense from the cost control perspective, port managers admit that the ports have a tough time assessing the economics of the technology-driven innovation and figuring out how to realise tangible benefits from their ongoing investments.
Some time ago, I predicted that consolidation among carriers and rationalisation of networks that occurred in 2017 would jeopardise some pure transhipment ports, and threaten the value and importance of lesser gateway ports. Furthermore, this process would further congest the most popular gateway ports and the roads around them. I then proposed that each type of port would have to apply technology strategy differently to remain competitive to shippers and carriers alike. Since then, carriers’ insistence on using ultra-large vessels wherever possible kept forcing port and terminal managers to improve their capacity to serve, while keeping their fees low.
At the same time, ports went beyond funding projects focused on higher throughput and started spending on better traffic management, sourcing environmentally responsible energy, and curbing pollution. Publicly available P&L statements show that port fees are not going up fast enough to recoup all proposed technology and automation investments the ports need to fit the behaviour of the carriers, needs of port partners and expectations of the shippers. Whenever a port made substantial technology upgrades, shippers and carriers benefit from the increased speed at which the cargo moves between the ships and the hinterlands. This problem of one side needing to invest without reaping the benefits, while the other accrues the benefits is not unique to ports and shipping.
For any port to benefit from their investments in technology innovation, it would have to create something unique, competitive, not easily copied, and limited in the extent to which the value it generates is passed in its entirety to carriers and shippers. By that token, investing in innovative autonomous equipment in the yard is easily repeatable, and any value generated by this innovation will quickly compete away.
I have always felt that there is plenty of value locked in ports’ data that could be combined with external data, packaged as a fee-based service and monetised. Community information systems, for example, Portbase (Port of Rotterdam), Portnet (Singapore) or MGI (Marseille), demonstrated the promise and the limitations of commercialisation. Such platforms deliver diverse information like pre-reporting of vessels, shipment statuses, intermodal transport statuses, export documentation, and loading/unloading documentation. As nearby competitors followed suit and deployed their own platforms, the opportunity for any one port to charge significant user fees for the value obtained from accessing port community information systems was quickly reduced to zero.
In due course, I could imagine a port that develops a truly smart port platform that is aware of what is carried on the ships calling the port, the needs of the shippers, the conditions affecting the transfer of cargo outside the port gates, the conditions at alternate discharge/load ports. Also, applying optimisation tool(s) to actively re-plan cargo transfer decisions on behalf of the shippers. Think of fee-based systems to improve on-time/in-full delivery of freight between the shippers and the carriers.
The power of such platform comes from multiple data sources, an enticing proposition for adjacent ports to join and collaborate. After all, increased profits can be shared by all participating ports, not just the leader of the platform. That way, instead of being passive players worrying about the maximum efficiency of their yards, ports could become active players deciding on cheaper ways to move the cargo to/from the ships on behalf of the shippers.
I am confident that service such as this would be so valuable to shippers that revenue from it could justify port’s information technology investment. Asking for collaboration between competing ports might be a tall order, but whichever port masters this idea, the success and tangible value will follow.